Agents Must Break The Commodity Cycle
As the insurance market hardens, many underwriters and producers are in a state of chaos. Underwriters are buried in submissions, while independent agents and brokers are marketing their business to cover the bases and demonstrate to clients that they have done their homework when presenting price increases.
Clients angry about steep hikes they may not understand often respond by choosing to market their business at the next opportunity. Such conditions only perpetuate clients generally negative perceptions about insurance.
Promises to reduce clients premium may have made the job of selling insurance easier, but it also did much to damage clients perception of insurance. Clients came to believe their insurance programs were about price rather than value–and the sales approach of agents and brokers only served to reinforce clients "insurance as commodity" reality.
A product or service becomes a "commodity" when there are few perceivable differences between it and other similar products or services. When clients receive similar sales messages from one agent or broker to the next, the only remaining distinguishing factor to guide the client in making a selection is price.
Consider the following insurance selling patterns while thinking about your current approach:
On the prospecting call, you say, "Id like to come by and take a look at your program/policies and see where we can reduce your costs."
During the first visit, you focus on getting copies of the current program/policies and tell the client you want to take the information back to your office and work up a quote. In addition, you tell the client about you and your capabilities by explaining that you have leverage with key markets, offer a segmented focus (suggesting industry knowledge), have a staff with targeted expertise in claims and loss control, provide superior levels of service, offer hands-on support to clients, and so on.
During the proposal presentation, you review the numbers, often using a spreadsheet format presented in a standard "boilerplate" insurance document and loaded with "insurance speak," begging the client to flip to that last page, which is price. Upon receiving the clients objection, you say, "Lets compare apples to apples"
Once you have the business, you rarely see the client, if at all. The "relationship" is maintained by e-mail and snail mail, or by staff support with whom they have never formally met. Often the client must contact you, rather than you contacting them when they have a need or are looking to make changes.
You work with your clients with a "12-month term" in mind, always aware that somewhere a policy is about to expire and you must begin to focus on the renewal 60 to 90 days out.
It is important to consider here that when an insurance buyer (whether a small-business owner, a risk manager or a CFO) experiences the same presentation or process over and over again, their perceptions about insurance are repeatedly confirmed:
That insurance is a commodity with few or no differences among the many options.
That insurance professionals are more interested in "the deal" than their business.
That insurance is a 12-month transaction determined by price.
If you want your clients to stop treating you and insurance as a commodity, then stop selling insurance as if it is a commodity!
Underwriters who sell to agents and brokers, and producers who sell to clients, all would agree that their goal is not to be considered a "vendor," but rather a "partner"–a necessary extension of their clients businesses. Selling a commodity does little to help achieve that goal.
The good news is that you are responsible for how clients perceive you, your expertise, your importance as a partner and the value they receive through the insurance solution you provide.
The key to selling value is knowing how to translate your capabilities into the clients definition of value effectively enough for the client to:
Justify the investment in the premium or recommendation.
Overcome the discomfort associated with changing carriers, agencies or programs.
Accept steep increases at renewal.
Consultative, value-added selling involves interacting with clients; extracting, clearly defining and understanding their needs; then converting "insurance-the-commodity" into meaningful and targeted solutions, with points of measurement to help justify the investment.
True consultative, value-added selling is characterized by seven key factors:
Understand your value propositions and key differentiators, how clients receive value and benefit from them, and how they compare to those of your top-five competitors. Know the strengths and weaknesses of your brand value and how to leverage your brand persuasively to minimize and/or eliminate a competitors threat.
Understand your clients and their industries, their marketplace, their issues, their business challenges, processes and strategy. Understand how your value propositions and key differentiators solve specific business challenges or fill specific needs.
Understand how to use communication to build relationships and shift buying behavior. Know how to use conversational dialogue techniques to ask purposeful questions, then listen to understand the client and their specific needs.
Understand how to convert your value propositions and key differentiators into customized solutions targeting the clients operational and personal needs, thereby providing tangible value that justifies the investment.
Understand the clients expectations of the "partnership." Identify specific behaviors, activities, outcomes, commitments, time frames and expectations. Establish mutual business goals. Consistently execute on promises and meet and exceed the clients brand experience.
Understand how to remain accountable to the partnerships impact on the clients bottom line, such that the client feels they have received value beyond their investment.
Understand relationship management strategy and organization to ensure that you and your agency or brokerage are filling all current needs while helping the client to anticipate all applicable future needs. Become solutionists–true extensions of the clients business, beyond the "vendor" status.
Once you understand these seven factors, take the business evaluation challenge (see sidebar).
To be perceived as something other than a commodity, you will need to conduct yourself and your business in a way that distinguishes you from everyone else, while providing some value or return on your clients investment.
Linda Keats is president of The Corporate Training Group, Inc. in Atlanta. She can be e-mailed at LKeats@Corptrain.com.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 17, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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